LG Electronics (LGE) owns 37% of LG.Philips LCD (LPL). LGE operates two Passive Matrix OLED (PMOLED) lines in Gumi, South Korea, where most of LPL’s TFT LCD fabs are located. Since 1999, LGE has invested over $200 million to develop its OLED business. LGE’s two PMOLED lines have a 2-3 million per year production capacity.
To focus investments toward display manufacturing, LGE is in negotiations to transfer its PMOLED business to LPL. I think it’s a good move. Once the transfer is finalized, LPL will need to update the PMOLED lines to a more advanced Active Matrix OLED (AMOLED) technology, which LPL has been developing. The technology update will take some time. However there is still a snatch: LPL does not have good capabilities to modularize small panels and have been using LG Innotek and others to do so. Although AMOLED display shipments will be low, the added cost of logistics and administration will give LPL a disadvantage as long as it does not build its LCD module capacity for small displays.